Petrobras (PBR) Stock Soaring on Brazil Domestic Bond Offering Speculation

NEW YORK (TheStreet) -- Shares of Petroleo Brasileiro Petrobras (PBR) are higher by 2.49% to $9.87 in late morning trading on Tuesday, following a Reuters report suggesting the Brazil-based oil and gas company is preparing to offer debt notes in Brazil's domestic markets, which could be sold as soon as next week.

State controlled Petrobras is looking for at least 3 billion reais ($983 million) with the transaction, a source told Reuters, adding that if additional and supplementary allotments were made the offer could bring in up to 4 billion reais.

The latest deal follows one from earlier in the month when Petrobras received a $3.5 billion loan from China Development Bank Corp., which highlighted Petrobras rising funding options in the aftermath of the corruption scandal.

Petrobras needs money to pay for already-contracted investment outlays this year and to refinance some of the $170 billion it owes banks, suppliers, and investors, Reuters said.

The deal would be in three segments, Reuters noted, the first would be a five-year portion and could pay almost 1.8% above the benchmark CDI interbank interest rate. The second would offer investors seven year debt and could pay close to 0.8% and the third portion would have maturity between nine and 10 years, paying 1.7% above comparable government inflation debt.

Separately, TheStreet Ratings team rates PETROLEO BRASILEIRO SA- PETR as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate PETROLEO BRASILEIRO SA- PETR (PBR) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

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